Dining Bills and New GST Rates for Restaurants
See how dining bills and new GST rates for restaurants are changing menu prices, service charges, and eating-out habits in 2025. A concise, insight-driven preview for diners tracking the real cost impact.
The new GST rates for restaurants introduced as part of GST 2.0 (effective September 22, 2025) are reshaping how much you pay when dining out, especially in hotel restaurants and high-end places. Restaurants and diners alike should watch closely.
Key Takeaway
- The “new GST rates for restaurants” mean most casual dining (stand-alone or non-specified premises) now pays 5% GST without ITC, while only restaurants in hotel “specified premises” will continue with 18% with ITC — a reform that will lower costs broadly and clarify taxation for diners and businesses alike.
- If your restaurant is outside “specified premises”, you’ll likely pay just 5% GST; inside specified premises, it’s 18% with Input Tax Credit.
Details: Who’s Affected, What Changes Took Place
| Type of Restaurant | Old GST Rate | New Rate (From Sept 22, 2025) | Input Tax Credit (ITC) |
|---|---|---|---|
| Stand-alone / non-specified premises | ~12-18% depending on facilities | 5% | No ITC |
| Restaurants in specified premises (hotel rooms ≥ ₹7,500/night) | 18% etc. | 18% | Yes, ITC allowed |
Additional changes include rationalisation of GST on raw materials/supplies used by restaurants, aiming to reduce cost and compliance burden.
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Why It Matters / Impact on Diners & Businesses
Lower bills for many eat-out
If you dine in standalone restaurants or non-specified premises, your GST component is significantly lower. That means real savings, especially for frequent diners.
Clarity and fewer surprises on the bill
The restructure removes much of the confusion over when 12% vs 18% vs 5% applies. It’s easier to know ahead of time what your tax charge will be.
Something to watch for premium dining
High-end restaurants within hotels are impacted differently: though rates remain 18%, they can now claim ITC. But they may adjust pricing or service fees to preserve margins.
Business implications
Restaurants need to confirm whether they fall under “specified premises”, train staff to apply the correct GST, adjust menus/billing systems, and possibly rethink pricing.
Expert View & Data Insights
- According to TaxGuru and legal experts, while some rates were unchanged, the biggest benefit is from the rationalisation of raw-material supply GST, which lowers working capital for restaurants.
- Analysts expect consumer demand for casual dining to rise, as more people feel comfortable going out when taxes are visibly lower.
What Should You Do as a Consumer or Restaurant Owner?
- When dining, ask if the restaurant is in a “specified premises” to know whether the 18% rate applies.
- Check your bill, ensure correct GST and that there are no hidden costs or fees that replicate old tax-burden.
- For business owners, audit your supply chain so you benefit from reduced GST on inputs; also update billing software to reflect new rates.
- Watch updates: future govt notifications or clarifications may adjust definitions, especially around “specified premises”.
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FAQs
Q1: What exactly are “specified premises”?
They are hotel premises where the room tariff is ₹7,500 or more per night. Restaurants in those premises are treated differently for GST.
Q2: Does the 5% GST rate apply for takeaway or delivery?
Yes — standalone restaurants and non-specified premises offering takeaways or deliveries also come under the 5% rate, without ITC.
Q3: If I paid ITC before, can I still use it?
Existing ITCs already credited before the change remain valid. The rule is about applicability going forward for new supplies.
Q4: Does this make dining in luxury hotel restaurants cheaper?
Not necessarily cheaper in terms of percentage rate — they still pay or charge 18% — but because they can claim ITC, their cost of operation may drop slightly, potentially softening price increases.
Conclusion
These updated restaurant GST rules under GST 2.0 bring much-needed simplification and relief for many. Diners at smaller or standard restaurants will see lighter tax burdens, while luxury hotel dining continues under higher rates, but with better input-credit clarity.
